Research on Motivation of Order Information Leakage and Coordination Strategy in Supply Chain under Demand Information Asymmetry


Student thesis: Doctoral Thesis

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Awarding Institution
  • Kwai Sang CHIN (Supervisor)
  • Gengzhong Feng (External person) (External Supervisor)
Award date3 Mar 2020


Due to the long lead time and short life cycle of products in clothing, toys, electronics, and other industries, there exists great market demand uncertainty. Demand uncertainty can lead to a range of problems, such as mismatches between supply and demand, shortages and decrease of customer satisfaction. Acquiring effective market demand information is helpful to reduce the negative impact of demand uncertainty and improve the accuracy of decision making. However, due to the difference in market position and customer group between suppliers and retailers, there exists asymmetric demand information in the supply chain. Information sharing between upstream and downstream of the supply chain is one of the important ways to solve the problem of asymmetric demand information and improve supply chain performance. However, information sharing also further increases the risk of suppliers leaking retailer information to competitors or third party enterprises. Information leakage damages the cooperation between upstream and downstream of the supply chain and seriously hinders the coordinated development of the supply chain. At present, most of the literature mainly investigates the supply chain members’ incentives of information sharing under different supply chain structures, but there is little analysis on information leakage caused by information sharing and little research on strategies to prevent information leakage. Therefore, according to the realistic background, this paper considers the downstream multi-agent supply chain model including one supplier and two retailers (incumbent and entrant), in which the only incumbent can obtain accurate market demand information. The dissertation firstly constructs the signal game model of the supplier leaking the incumbent’s order information and analyzes the condition of the information non-leakage equilibrium, which lays a foundation for the research of preventing the information leakage and realizing the coordination of the supply chain. Then, the dissertation analyzes the value of the supplier’s contract design mechanism in preventing information leakage by using the two-part tariff and franchise contracts commonly used in the contract design theory. Finally, the dissertation studies the positive effect of collaboration mechanism between the supplier and the incumbent on preventing private order information disclosure. The conclusion provides theoretical support and decision basis for eliminating information leakage of suppliers and realizing supply chain coordination and sustainable development.

Specifically, the main work and innovative achievements of the dissertation are as follows:

(1) The first work constructs a signaling game model of horizontally competitive retailers’ order considering order information leakage and shows the sufficient condition of information non-leakage equilibrium. The results show that when the probability of the high demand market is high and the revenue sharing rate is large, the supplier is better off under information non-leakage, i.e., there exists information non-leakage equilibrium in the supply chain. The conclusions reveal the supplier’s incentive with information leakage and provide suggestions for preventing information leakage and promoting the stable development of the supply chain.

(2) The second work constructs a model of the supplier’s contract design considering order information leakage and shows the sufficient condition of information leakage prevented by the supplier’s contract design mechanism. The results show that when the demand variation is medium and the supplier would not leak under two-part tariff contract, the marginal profit of the product is larger. Hence, both the supplier and the incumbent prefer two-part tariff contract to prevent information leakage, resulting in “win-win” outcome. The results reveal the value of the contract design based on the two-part tariff contract in preventing the order information leakage. The conclusions also provide enlightenment for the supplier and the retailers to reduce the conflict of contract preference and realize the supply chain coordination.

(3) The third work constructs a model of upstream-downstream collaboration in supply chain considering order information disclosure and shows the sufficient condition of concealing private information by the supplier-incumbent collaboration. The results show that when the supplier and the incumbent would collaborate and not disclose information under any given market demand variation and revenue-sharing rate, the whole profit of them is larger. Hence, there exists information non-disclosure equilibrium. Additionally, the conclusions provide suggestions for improving the operational efficiency of the supply chain and promoting supply chain coordination.

    Research areas

  • Information leakage, Contract design, Supply chain collaboration, Information asymmetry